Business News
GateHouse Media Announces First Quarter 2009 Results
Monday 11. May 2009 - - Total reported revenues were $139.2 million, a 15.0% decline compared to the prior year.
First Quarter 2009 Highlights
– Total reported revenues were $139.2 million, a 15.0% decline compared to the prior year.
– Total As Adjusted Revenues were $138.6 million, a decline of 16.3% on a same-store basis.
– Circulation revenue declined 0.7% on a same-store basis.
– Reported operating costs and SG&A expense decreased $10.1 million or 7.1% from the prior year.
– Reported net loss of $31.9 million, compared to a $28.8 million net loss in the prior year.
– As Adjusted EBITDA was $9.3 million, a 67.4% decline on a same-store basis.
– Amended long-term credit facility to allow for repurchase of debt below par through December of 2011.
GateHouse Media, Inc. (the “Company” or “GateHouse Media”) today reported financial results for the quarter ended March 31, 2009.
The Company reported total revenues of $139.2 million which represents a decline of 15.0% versus prior year. Excluding discontinued operations, As Adjusted Revenues were $138.6 million for the quarter, down 16.3% on a same-store basis versus the same quarter in the prior year. The decline in revenue was driven primarily by the print classified advertising category, which was down 37.2% on a same-store basis. The employment, automotive and real estate categories within classified were the worst-performing categories as those sectors in the economy remain weak.
In the first quarter, local advertising (including preprints and online) was further impacted by the economic downturn, declining 13.4% on same-store basis. As in prior quarters, these categories proved to be much more stable in the small markets in which GateHouse operates. Circulation revenue remained stable, declining 0.7% in the first quarter.
The Company is aggressively controlling costs to mitigate the weak revenue environment. In the first quarter, operating and SG&A costs declined by $10.1 million or 7.1%. In response to the accelerated revenue decline experienced in the first quarter, more aggressive cost reduction initiatives have been put in place for the remainder of 2009. Compensation expense was down 10.1% in the first quarter on a same-store basis. In addition, despite a 16.6% increase in newsprint prices over the first quarter of 2008 newsprint expense was up only 1.7%. The Company expects newsprint prices and consumption to decline further in the coming months.
As Adjusted EBITDA for the quarter was $9.3 million which was down 67.4% on a same-store basis. The reported operating loss for the quarter was $10.3 million compared to operating income of $0.2 million in Q1 2008. The Company expects its EBITDA run rate and margins to improve considerably through the remainder of the year given the seasonal strength of upcoming quarters combined with the impact of cost reduction initiatives undertaken year to date and the expectation of further declines in newsprint prices.
Interest expense for the first quarter was $17.4 million, down $7.0 million or 28.8% versus the prior year. The decline was driven primarily by lower LIBOR rates. The Company remains highly focused on cash management in order to preserve liquidity in this economic environment. Capital expenditures in the first quarter were $1.3 million, down 49% from $2.6 million in the prior year period.
Non-cash compensation expense for Restricted Stock Grants in the first quarter was $0.8 million. One-time costs incurred and other non-cash expenses in the quarter were $2.6 million. These charges related primarily to reorganization and expense control initiatives introduced to realize permanent expense savings, particularly a reduction in staff levels in light of the current revenue environment.
Commenting on GateHouse Media’s results, Mike Reed, Chief Executive Officer, said, “Our first quarter results, in particular the print advertising numbers, reflect the deepening of the country’s economic recession in smaller markets around the country. To combat this revenue softness, we are aggressively pursuing further cost reduction opportunities as well as executing on revenue initiatives primarily tied to pricing and new product launches.
“Our cost controls were very good in the first quarter. However, we will be even more aggressive over the next couple of quarters, as we weather this economic downturn. We remain highly focused on liquidity and improving our cash position.
“We view our exclusive local content as our greatest asset and as our sustainable competitive advantage. We are working diligently to intensify our local news coverage to further solidify these advantages. As mentioned, we continue to aggressively identify cost reduction initiatives but at the same time we are investing in the future of our operations. By focusing on our local market strategy and our cost structure, we expect to emerge from this economic crisis a much better positioned and stronger organization.
“On the capital front, we were pleased to amend our long-term credit facility to enable us to reduce debt by purchasing it below par via modified Dutch Auctions over the next three years. This will be a key factor in our efforts to de-lever over the next couple of years.”